The chancellor announced a change to off-payroll working rules in yesterday’s budget for the private sector, which could have wide implications for the oil and gas industry.
From 2020, the responsibility for operating off-payroll working rules will move from individual contractors to large and medium sized organisations engaging them.
The move puts companies hiring contractors under the IR35 legislation at risk of being liable for tax and national insurance costs if they fail to properly determine if the rules should apply.
It follows similar reform for the public sector.
IR35 is a law intended to stop tax avoidance to make sure contractors who work through their own company, but in practice are employed by a third party, pay the right tax as an employee.
It comes as demand increases across the UK for flexible workforce and could open the door for more interim staff arrangements in the North Sea, which uses a large contractor base.
Neil Greene, Senior Consultant at HRC Recruitment, said: “The Chancellor stopped short of introducing IR35 reforms across the private sector, limiting its application to large and medium-sized organisations.
“While the changes won’t come into effect until 2020, there now needs to be a conversation in the private sector about how it will accommodate the amended legislation – particularly among big, multinational companies which often employ large numbers of contractors in the UK.
“In some ways, they may be able to take their lead from how public sector organisations reacted to the reforms’ introduction years ago and take measures ahead of the 2020 deadline.”
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